HIGHLIGHTS-Reuters interview with Czech c.banker Hampl

...joining the seven-strong policy board at the CNB in December.

For a related news report, double click on the code in brackets [ID:nL16886267].

ON INFLATION OUTLOOK:

"I would say that the Czech economy currently faces no significant inflationary pressures.

"The Czech economy is roughly running at its potential (output rate). There is no demand-pull pressure. I do not feel it, I do not see it, I am not able to identify it anywhere.

"I would rather say there are risks in the anti-inflationary direction.

"One is food prices. Intuitively, I do not see any reason for food prices to grow within a year, or year and a half.

"It (also) seems to me that oil prices will be subdued rather than undergoing any dramatic change."

ON QUARTERLY UPDATE OF INFLATION FORECAST FOR 12-18 MONTHS AHEAD, DUE ON JAN. 25:

"My assumption is that the prediction will ... reflect the shift in the exchange rate (of the crown) and also the fact that demand-pull pressures are generally muted.

"I expect the inflation prediction to be consistent with the model of inflation targeting and to -- according to its logic -- see inflation returning more or less to the (3 percent) target."

ON NEAR-TERM OUTLOOK FOR INTEREST RATES:

"For me personally, there is a big question mark over the timing of a potential rate increase.

"What comes out of my view of inflation risks is a different timing for rate changes than in October."

ON CROWN'S FIRMING OVER THE PAST FEW MONTHS:

"I view the exchange rate development far less dramatically than perhaps some of my colleagues ... I think Czech exporters have learned to adjust their business and financial management to external conditions."

ON GENERAL APPROACH TO POLICY IN THE LIGHT OF CROWN RISE:

"I do not think the regime of inflation targeting is about an interest rate reaction to the past exchange rate development. Inflation targeting is a forward-looking regime.

"As far as I am concerned, I do not want to allow inflation targeting to collapse to adjusting monetary conditions ex-post by changing interest rates relative to past developments.

"More frequent changes in interest rates are typical for economies which are generally more flexible, where a change in the key parameter will flow through the entire economy and make an impact, in either direction. I do not believe that the Czech economy is at present in this position."

ON STRATEGY FOR EURO ADOPTION:

"I would very much like to see the Czech economy enter the euro zone when it is apparent that the potential risks have been minimised and when it will be able to consume the benefits.

"I would like to see the economy be cured of its dangerous addictions before it enters the euro zone ... I say that so far I do not see the wider public demand such changes, nor do I see any supply of these changes ... Until I see one or the other -- or better both -- I is very difficult for me to think about the timing (of euro adoption).

"For this economy, adoption of the euro is not a question of life and death. What is a question of life and death is to be ready to adopt the euro."

[PRAGUE/Reuters/Finance.cz]